Fisher v. PhŒnix Assur. Co. of London

• Decision Date: 19 October 1926
• Docket Number: No. 84.,84.
• Citation: 134 A. 861
• Parties: FISHER v. PHŒNIX ASSUR. CO. OF LONDON.
• Court: New Jersey Supreme Court

134 A. 861

FISHER

v. PHŒNIX ASSUR. CO. OF LONDON.

No. 84.

Court of Errors and Appeals of New Jersey.

Oct. 19, 1926.

(Syllabus by the Court.)

Appeal from Supreme Court.

Action by Lloyd Fisher against the Phoenix Assurance Company of London. From a judgment for defendant, plaintiff appeals. Affirmed.

Appeal from a judgment of the Supreme Court, Hunterdon county circuit, in which Judge Jess, sitting without a jury, filed the following opinion:

"A jury having been waived, this case was submitted to the court for decision on an agreed state of facts and briefs on the law. The question to be decided is whether the defendant is liable to the plaintiff under a policy of fire insurance for the whole amount of a loss suffered by the plaintiff's assignors, or whether its liability is limited to a proportionate part of the loss, by virtue of a prorating provision in its policy.

"The facts, as stipulated, are that on the 24th day of July, 1923, George E. Bergkamp & Son, Inc., obtained from the Stuyvesant Insurance Company a three-year fire insurance policy for $5,000, covering property then owned by the Bergkamp corporation. The policy was in the usual New Jersey standard form, and contained a mortgage clause in favor of the Fidelity Title & Mortgage Company of Ridgewood, N. J. The policy was delivered to the mortgagee and remained in its possession until after the fire on the 17th of June, 1924, which fire gave rise to the questions here involved. This policy contained the following stipulation: 'This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void * * * if any change other than by the death of an insured take place in the interest, title, or possession of the subject of insurance, * * * or if this policy be assigned before a loss.'

"On or about December 15, 1923, the property insured was sold to Harvey and Elizabeth Hoyt. On the 18th day of January following the new owners, secured a $6,000 fire policy on the property from the Phoenix Assurance Company, Limited, of London. This policy contained the following provision: This company shall not be liable under this policy for a greater proportion of any loss by and expense of removal from premises endangered by fire than the amount hereby insured shall bear to the whole insurance, whether valid or not, or by solvent or insolvent insurers, covering such property.'

"A few weeks thereafter application was made to the mortgagee for a guarantee of title. This was the first knowledge the mortgagee had of the change of ownership. The mortgagee immediately wrote to the agent of the Stuyvesant Insurance Company, who had countersigned the original Stuyvesant policy,' notifying the agent of the change of ownership and requesting that an indorsement be sent to the office of the mortgagee, to be attached to the original policy to protect the new owner and the mortgagee. Neither the mortgagee nor the owner ever received any acknowledgment from the Stuyvesant Company, or from any of its agents, of the receipt of the mortgagee's letter, and there was never added to the Stuyvesant policy any indorsement showing change of ownership.

"The Stuyvesant Company claims that the first knowledge it had of the change of ownership was when the proof of loss was submitted by the mortgagee, following the fire of June 17, 1924. Neither the seller nor the purchasers of the property have any memorandum as to the passing of title, Mr. Hoyt is under the impression that he made an allowance to Mr. Rergkamp for the unearned premium on the Stuyvesant policy.

"On or about September 15, 1924, Harvey and Elizabeth Hoyt prepared and executed a properly drawn proof of loss, addressed to the defendant, the Phoenix Insurance Company, Limited, in which the whole damage was stated to be $3,123.66, and in which the loss was apportioned as follows: The Phœnix Insurance Company, Limited, $2,104.44; the Stuyvesant Insurance Company, $722. (The amount of the loss apportioned to the defendant, as stated in the stipulation, namely, $2,104.44, obviously was a typewriting error, since it is conceded by the parties, and the other evidence shows, that this sum should be $2,401.44.) The proof of loss was approved by an officer of the defendant company on September 22, 1924. A draft as of that date for $2,401.44 was tendered to and accepted by the insured.

"On October 1, 1924, the insured executed and submitted to the defendant a new proof of loss, alleging the loss to be $3,123.66, and claiming the whole amount thereof from the defendant, not giving credit for any pro rata share against the Stuyvesant Company. On April 29, 1925, the attorney for the insured wrote the defendant that he was instituting suit against it, and accordingly was returning the draft. This company has not paid, and denies liability for, any claim under its policy.

"The insured have assigned their rights under the Phœnix polliy to the plaintiff in this suit. The plaintiff insists that the defendant is liable for the whole amount of the damage done to the property in question. The defendant seeks to limit the liability to a pro rata share of the total loss. The plaintiff relies upon the provision in the Stuyvesant policy that the entire policy, unless otherwise by agreement indorsed therein or added thereto, should be void if any change other than by the death of the insured should take place in the interest, title, or possession of the subject of insurance.

"The plaintiff's claim thus is predicated upon the proposition that the Stuyvesant policy was rendered absolutely void by the change in the ownership of the property without the insurer's consent indorsed upon or annexed to the policy, and that consequently there can be no prorating with that policy. The Stuyvesant Company is not a party to this action, and therefore its liability, if any, to the plaintiff on its policy, cannot be determined in this proceeding, so as to be binding either upon that company or the plaintiff.

"Assuming that the Stuyvesant Company could successfully resist enforcement of its policy by the plaintiff on the ground that the placing of other insurance upon the property without its consent, manifested in accordance with the provisions of its contract, voided the policy, I am not permitted to hold as a matter of law, that that would be the result, when to do so would require me to resolve every issue of fact in favor of the company, in the absence of such disclosure of the facts as could only be obtained by litigating the questions involved.

"In the case of Plockzek v. St. Paul Fire & Marine Insurance Co. (N. J. Ch.) 91 A. 812, Vice Chancellor Howell held that a provision similar to that in the Stuyvesant policy must be enforced, unless there is evidence that it has been waived by the insurer. He found no evidence of waiver in that case, but stated that in a given case the facts might warrant the conclusion of a waiver.

"The validity or invalidity of the Stuyvesant policy is not, however, the controlling factor in this case. The plaintiff here seeks to hold the defendnnt liable under its policy for the whole amount of the loss resulting to the plaintiff's assignors. The defendant's liability is to be determined by reference to its contract of insurance. This contract provided that the company should not be liable for a greater proportion of any loss than the amount insured by its policy should bear to the whole insurance, whether valid or not, covering the property in question.

"It will, of course, be conceded that under this provision the defendant would be entitled to prorate the loss with the Stuyvesant Company, if that company's policy is a valid obligation enforceable against it. The limiting of the liability of the insurer for any loss to its proportional share of the whole insurance is explicitly expressed in the prorating provision. That this liability shall thus be limited, without regard to the validity of other insurance, seems to be expressed with equal clearness and conclusiveness. The clause 'whether valid or not plainly imports a purpose to exclude from the scope of the prorating provision any question as to the liability of other insurers on the same property.

"As was said by the United States Supreme Court with respect to another provision of a fire insurance contract: 'This clause, as a known part of the stipulations of the policy, ought to receive a fair and reasonable interpretation, according to its obvious import.' Carpenter v. Providence Washington Insurance Co., 16 Pet. 495, 10 L. Ed. 1044.

"It is true that there has been a conflict of judicial opinion as to the effect to be given provisions in fire policies somewhat analogous to that under consideration. Some of this contrariety of view has been due to the special facts in given cases, or to the varying terms of the insurance contracts subject to review. When the test has been the meaning to be attributed to provisions essentially similar to that in the prorating Stipulation of the defendant's policy, the weight of authority is that they must be interpreted according to their plain purpose.

"The stipulation inserted in a fire policy by which the insurer is liable only for its pro rata share of the loss, whether other insurance is valid or not, was devised to obviate the difficulty arising out of a determination as to the validity of such other insurance. 19 Cyc. 841. In the case of Jersey City Insurance Co. v. Nichol, 35 N. J. Eq. 291, 40 Am. Rep. 625, the Court of Errors and Appeals held that, where a second policy by its express terms was void at the time it was executed, there could be no apportionment of loss on that and a prior valid policy. The rule was stated in the syllabus of the opinion to be that, where an apportionment of loss is provided for in a policy, this can only be construed to apply to other insurance valid in its inception.

"The prorating provision of the policy before the court in that case did not contain...